Am I able to limit the amount of employee data that’s moved to Employee Central Payroll so that it’s only what’s required for audit purposes (i.e. the past 7 years)?

Yes. The Nexus Suite allows you to easily specify a key date and apply this to each relevant employee Infotype so that only data on/after that key date will be replicated into Employee Central Payroll. Additionally, payroll results can also be limited to only those paid after a specified key date.