Beijing tax authorities are seeking more than £1m in unpaid taxes and fines from the outspoken Chinese artist Ai Weiwei, who was released last week after nearly three months in detention, one of his close friends has said.

The artist was released on bail last Wednesday as the Chinese authorities said he confessed to tax evasion and pledged to repay the money owed.

His family has denied he evaded any taxes and activists have denounced the accusation as a false premise for detaining Ai, who was very outspoken and criticised the Chinese Government's authoritarian ways and disrespect of civil liberties.

The Beijing local taxation bureau informed Ai that he owed around 5m yuan (£484,000) in unpaid taxes and that he would be fined about 7m yuan (£678,000), said Liu Xiaoyuan, a human rights lawyer based in the Chinese capital. Liu does not legally represent Ai, but has been a friend and supporter for many years.

Ai, who has shown his work in London, New York and Berlin, has earned huge sums selling his work at auctions and through galleries. Last year, he filled the Turbine Hall of the Tate Modern gallery in London with millions of handmade porcelain sunflower seeds and a 100kg pile of the seeds sold for £349,250 at auction in February.

Ai's mother, Gao Ying, told the Guardian that two tax bureau officials delivered the notice to her son on Monday and asked him to sign it in acknowledgment but he refused. Gao said she was not sure of the specifics in the notice, but understood that the alleged violations are ten years old.

"We don't know anything about these taxes," she said. "These taxes date back 10 years. Why, at that time, if they really had not paid their taxes, why did they not say anything about it every year?" she told the newspaper.

Since he was freed on bail, Ai has declined to comment on his detention or on the accusations of taxes evasion. When asked to confirm his friend and mother's claims he once again declined to comment, saying the terms of his bail barred him from doing media interviews.

When he was released, the Chinese foreign ministry repeated allegations reported earlier by state media that a company linked to Ai, Beijing Fake Cultural Development, had evaded a "huge amount" of taxes and intentionally destroyed accounting documents.

However Ai's wife, Lu Qing, had previously referred to the company that handles business aspects of his art career, as belonging to her.

While the Chinese government insist the reasons behind Ai's detention lies in his taxes frauds, his family and supporters maintain he is being punished for speaking out about the Communist leadership and social problems.