but it is an EU member so it should be the same as in other EU member countries i reckon.
That's what the bureaucrats keep trying to tell us, but practice varies wildy from theory, and there are still many differences in the systems despite the various "harmonization" directives the EU keeps issuing.
Under the U.K. system you are required by law to have insurance, but that's as far as it goes. Your contract with the insurance company is a purely private affair and if you tell them to stop cover from a certain date that's what they do. They're not the slightest bit concerned over whether you are declaring the car off road or anything (although the cancelation goes onto an insurance database which can be checked by the police for valid insurance).
I'd be inclined to explain the situation to the insurance company again, emphasizing that you now have insurance in the U.K. There definitely
is a provision in all that EU legislation which states you are perfectly within your rights to get insurance from another EU country.
I guess the big question is, when one stops insurance...how long will it take the DMV to request we surrender the license plates...
No idea. But if the Austrian DMV was notified of the cancelation by your father's insurance company and demanded the plates, personally I'd adopt the same approach -- Tell them you now have insurance in the U.K. (send them a photocopy of the insurance certificate as proof maybe).
Isn't it great to know that all these extra EU rules were supposed to make it
easier to move between countries?
D*** government!