The Inland Revenue says cash payments to workers are one of the major factors leading it to publicly call out the horticulture sector for bad tax practices.

Last week the tax department issued a revenue alert saying the cash payments, as well as the use of complex contracting arrangements, and failures to meet schedular payment rules were a threat to the integrity of the wider tax system.

Inland Revenue spokesperson Tony Morris said the department is likely missing out on tens of millions of dollars in tax and the alert was a warning to the industry.

"It's an opportunity for people to get their affairs in order, if they're not, before we come looking."

He said it was a complicated industry as many orchards use contractors for things like the harvest season.

"Most of the work and the money that's paid is actually paid out in cash, which obviously creates some possibilities and some ways that people can go around it."

Morris said Inland Revenue now has higher visibility across other government departments and has noted unusual payments going overseas that should have paid more tax.

"We're just getting more information, which is sort of making us a bit more concerned that things aren't quite as we thought they are."

He said any industry where things were mainly paid out in cash meant there was also a risk of money laundering.

He said a lot of the focus from the department has been on the kiwifruit sector in the Bay of Plenty, but he says subcontractors paying in cash is beginning to show up in the construction sector.

"It can be too easy for those that want to evade to evade, so that's where we've tried to put some stops in place and check some balances ... if there weren't cash payments for everything, that would be easier for us to trace, but cash payments can be easier to hide for people."

Apples and Pears NZ chief executive Danielle Adsett said the bad actions are frustrating and tarnish the reputation of not just horticulture, but New Zealand as a whole.

"Our growers will welcome any action against these wrong operators that are not compliant with the tax system, particularly those that have some labour issues associated as well."

She said in the Apples and Pears industry the issue is less likely to occur as it is less reliant on subcontracting.

"Most of our growers do the employing, and a lot of them are also RSE (Recognised Seasonal Employer) employers.

"And to be a part of the RSE programme, which is a gold standard programme, the level of compliance across your entire system... is robust."

She said in any case the industry welcomed "the full force of the law" on any poor actors.

Horticulture New Zealand chief executive Kate Scott said in a statement that the industry body supports action that promotes compliance and protects workers.

"Most growers work hard to do the right thing and operate responsibly in a complex regulatory environment.

"Where poor practice occurs, it should not be tolerated. Non-compliance undermines workers, compliant businesses, and confidence in the horticulture sector."

Scott encouraged members to review their arrangements keep clear records, and seek professional advice.