As others have said, all passports reported as lost/stolen are cancelled, and cannot be used.
The UK Passport Office used to require any subsequently found passports to be send to them. The main advantage of doing this for you, is that they record how often you lose your passport. If you make too many reports, it can be more onerous to get a replacement passport in the future. Returning the found passport may remove one of these counts against you.
I can't see any current requirement to return your found passports to them (they do provide details of what to do if you find someone else's passport). If I were you, I'd probably return the passport with a covering letter to them. One address is
HMPO, Globe House, 89 Eccleston Square, London, SW1V 1PN