Inland Revenue (IR) has issued a formal revenue alert targeting widespread tax non-compliance within the horticultural sector, citing the use of cash payments, false invoicing, and complex arrangements to evade GST, PAYE, and income tax. The department is now intensifying its scrutiny of growers and contractors, with the commissioner signaling that prosecution is an option for those identified as undermining the integrity of the tax system.
The Scope of Inland Revenue’s Horticultural Crackdown
The revenue alert serves as a rare, high-level warning from the Commissioner of Inland Revenue, reserved for significant or emergency areas of concern. According to the department, investigators have identified a pattern of businesses creating “false invoices” to mask the true nature of transactions. These arrangements are often designed to artificially lower tax liabilities by hiding labour supply costs or inflating expenses.
In response, IR is implementing stricter vetting processes for new GST registration applications. Any entity deemed not to be carrying on a legitimate “taxable activity” will have its registration declined. This measure specifically targets companies established solely as conduits for fraudulent invoicing.
Did you know?
In the year ending 30 June 2026, Inland Revenue opened approximately 130 investigations into businesses within the horticulture sector. These inquiries involved $7.2 million in tax discrepancies, with 45 cases remaining active.
Risk of Prosecution and Regulatory Information Sharing
Inland Revenue has confirmed it will pursue outstanding debts using its full range of powers. For those involved in egregious non-compliance, criminal prosecution is a risk; three individuals in the sector were sentenced to home detention for tax evasion during the most recent reporting year.
The crackdown also involves closer collaboration with other government agencies. If investigators uncover evidence of non-tax offending, Inland Revenue will consider sharing that data with the Police, the Labour Inspectorate, or the Ministry of Business, Innovation and Employment (MBIE).
Compliance Focus: Schedular Payments and Exemptions
Beyond invoice fraud, IR is auditing how growers and contractors handle schedular payments and certificates of exemption.
Frequently Asked Questions
Why did Inland Revenue issue a revenue alert for this sector?
Revenue alerts are reserved for significant or emergency concerns. IR issued this alert because it identified systemic practices—such as cash-in-hand payments and false invoicing—that threaten the integrity of the tax system across the horticulture industry.
What happens if a GST registration is declined?
If IR determines that an entity is not carrying on a genuine taxable activity, the registration application will be declined. This prevents companies from being used as vehicles for fraudulent tax claims.
Can tax investigations lead to police involvement?
Yes. If IR identifies evidence of non-tax offending, they may share information with the Police or the Ministry of Business, Innovation and Employment (MBIE) for further enforcement action.
Are you a business owner in the horticultural sector with questions about your tax obligations? Explore our comprehensive tax compliance guide for more information, or subscribe to our newsletter to stay updated on regulatory changes.