Hatch has been out of the saddle since fracturing vertebrae in a fall from Cogry at Cheltenham in December 2016.
The 24-year-old had harboured hopes of returning but the damage to his spinal column was too severe.
Hatch retires with two Cheltenham Festival wins to his name, Same Difference in the 2013 Kim Muir and a Grade One success in the RSA Chase on Blaklion two years ago.
Both were for Twiston-Davies, who provided him with the lion's share of his winners.
The Naunton handler told Press Association Sport: "We had a close association with him. It's terrible news.
"He was very good and was just at the beginning of what would have been a very successful career, I'm sure of that.
"I'm not sure what he's going to do next. I don't think he has a clue what he's going to do next.
"He's gone skiing so he might give it some thought after that, I imagine."
Hatch also won an Imperial Cup on Flying Angel, the 2014 Betfair Hurdle on Splash Of Ginge and the 2016 Sefton Novices' Hurdle on Ballyoptic - all for Twiston-Davies.
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