Have a look on the educationotherwise.org website - it has alot of useful information for when dealing with the LA such as
Compulsory education
7 Duty of parents to secure education of children of compulsory school age
The parent of every child of compulsory school age shall cause him to receive efficient full-time education suitable?
to his age, ability and aptitude, and
to any special educational needs he may have,
either by regular attendance at school or otherwise.
Home education is covered under "education otherwise" and ensures that every parent has the right to chose not to send their child into the state schooling system.
A Summary of the Law Relating to Home Education in England and Wales (4th Edition) can be downloaded here for information.
The rights of a parent to chose their childs education is also further enshrined in the Universal Declaration of Human Rights which says "Parents have a prior right to choose the kind of education that shall be given to their children" (Article 26, para 3).
The LA do not have a statutory powers to make anything other than informal enquiries of parents and these enquiries can be of a nature to suit the family. There is case law relating to this issue:
"an education authority should not, as a matter of policy, insist on inspection in the homes as the only method of satisfying themselves that children were receiving efficient full time education"
This, in short means that the letter you received has misinformed you, as
'It is a legal requirement for us to know that every Surrey child is attending school ..'
They do not have to attend school but must be educated. There is a big difference.
will try to hunt about for something else..