We analyse theoretically the interaction between water waves and a thin layer of fluid mud on a sloping seabed. Under the assumption of long waves in shallow water, weakly nonlinear and dispersive effects in water are considered. The fluid mud is modelled as a thin layer of viscoelastic continuum. Using the constitutive coefficients of mud samples from two field sites, we examine the interaction of nonlinear waves and the mud motion. The effects of attenuation on harmonic evolution of surface waves are compared for two types of mud with distinct rheological properties. In general mud dissipation is found to damp out surface waves before they reach the shore, as is known in past observations. Similar to the Eulerian current in an oscillatory boundary layer in a Newtonian fluid, a mean displacement in mud is predicted which may lead to local rise of the sea bottom.