Growers get ‘red card’ warning as IRD steps up tax scrutiny

For horticulturalists across New Zealand, the current operating environment is proving challenging. Economic growth has been slow following the economy’s contraction in 2024, while growers are also navigating an increasingly complex regulatory landscape. 

Against this backdrop, Inland Revenue is stepping up its scrutiny of the horticultural sector. For growers, contractors, and subcontractors, now is the time to make sure tax arrangements are understood, compliant, and able to withstand scrutiny. 

The message is straightforward: if a tax strategy sounds too good to be true, talk to a trusted advisor before proceeding. 

Take the ‘red card’ warning seriously 

In early August 2026, Inland Revenue issued a Revenue Alert (Revenue Alert RA 26/02) highlighting several issues on its radar across the horticultural sector. These include workers being paid in cash, invoicing arrangements designed to avoid GST, opaque contracting arrangements, and efforts to avoid schedular payment obligations. 

The Revenue Alert is a clear indicator that Inland Revenue has identified agribusinesses either not meeting their tax obligations or positioning themselves to avoid them. 

The alert can be compared to a red card in rugby: infrequent, but a clear signal that an issue has been identified and appropriate action will be taken. Unlike a red card in rugby, however, a Revenue Alert gives the industry an opportunity to take a step back, check its arrangements, and address any issues. 

Inland Revenue has indicated it is focusing its investigations on growers, contractors and subcontractors and will pursue anything that looks suspicious. 

Don’t let financial pressure lead to risky arrangements 

The scrutiny comes at a difficult time for many operators. Rising costs and changing market conditions are putting pressure on margins, while fixed outgoings and increasing expenses can make cash flow challenging. For growers, rising costs can’t always be passed on to consumers in a competitive market. 

A large shipment of fruit or vegetables into a particular region or area can also bring prices down unexpectedly, leaving growers caught between a rock and a hard place. 

In these circumstances, businesses may be tempted to rearrange payment outgoings to ensure key creditors and staff are paid. However, arrangements like those flagged in Inland Revenue’s Revenue Alert aren’t the answer. These arrangements can put growers, contractors and subcontractors on the wrong side of the tax rules, with prosecution a real possibility. 

Get advice before making tax decisions 

When cash flow is under pressure, it can be tempting to look for ways to reduce immediate costs or delay obligations. But a short-term solution can create much bigger problems if it doesn’t comply with the tax rules. 

Instead, legitimate strategies should be explored with your advisor before putting them into practice. Understanding your statutory obligations and getting advice early can help you avoid costly errors and ensure your tax position stands up to scrutiny. 

Inland Revenue itself recommends that those potentially affected by the issues outlined in its Revenue Alert discuss their circumstances with a tax advisor and consider whether a voluntary disclosure is appropriate. 

If you’re unsure, have the conversation 

If you’re uncertain whether an arrangement is within the bounds of the law, don’t leave it until Inland Revenue comes knocking. An open and frank conversation with your advisor can help you understand where you stand and what steps, if any, need to be taken. 

It’s also important to remember that engagements with accounting advisors are confidential and protected by non-disclosure. 

As the regulatory spotlight turns towards the horticultural sector, getting the right advice can provide valuable certainty. For growers already managing rising costs, changing market conditions, and pressure on margins, avoiding unnecessary tax liabilities is more important than ever. 

The Revenue Alert is a warning, but it’s also an opportunity. Take the time to review your arrangements, understand your obligations, and seek specialist advice where you’re unsure.

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