Assuming the ground is warming up in your area and the risk of frost is gone, ideally you should bare root (submerge in water and gently fan away the sol) and fan the roots outward and plant directly in the soil from the ground. Then you can place the old container mix on top of the soil (like mulch) so the nutrients go back into the root area.
But that wasn't your question.
If you're asking "will it hurt the tree, because I would rather just cut 1" from around the entire perimeter" then yes it certainly can set it back... how much really depends. Sometimes the citrus roots can curve and circle and wrap back around, yet there really aren't very many of them (especially those labeled "dwarf"). Thus cutting the outer 1" CAN be problematic in those situations as you'd eliminate a lot of the rootball. But it's not certain and if the tree is otherwise healthy will probably be fine. It will spend time rebuilding those roots to establish itself.
I have noticed a difference between trees on Standard/Full sized (Carrizo) vs. the "dwarf" root-stock like Trifoliate hybrids. In the dozen or so Standard root balls I've bare rooted they would've been totally OK with what you're describing.
"Can you?" Yes and it will probably be fine, assuming it is cared for correctly afterward. I would certainly put shade cloth over it if you've hot afternoon summer heat and really watch your watering requirements. I would also remove any fruit very early, if only to save just the little bit of energy before it dropped them later.
Honestly, I'd take it out of the container and post a picture of the rootball to get more specific advice to your tree. You didn't state the age, current container size, etc.
Good luck with your tree and I hope it goes well!