Hi,
Assuming you are the seller, how long ago did you send it?
Ask the buyer to check with their local sorting office and neighbours as posties sometimes forget to leave a card. Items are kept for 18 days before being returned to sender.
R.M. don't consider anything lost until 15 working days after due date of delivery UK. Most sellers will therefore usually ask the buyer to wait until it is deemed lost before refunding/replacing, but they aren't obliged to wait.
If you have a Proof of Posting then you can file a claim for up to £46 with R.M. when time allows. Claims need to be made within 80 days from date of posting. You need a form P58 from the P.O. or download from link at bottom of this page:
http://www.royalmail.com/customer-service/personal-customers/refunds-and-compensation/claims-process
You will need to attach a copy of the listing, the PayPal transaction and the receipt/proof of postage. Keep a copy of everything as not unknown for them to go astray.
R.M. will usually contact the buyer (UK) asking them to confirm non-receipt. If they don't respond within 5 days you don't get the compensation. Hence the need to maintain good comms with the buyer.
If the buyer opens a dispute/claim through eBay/PayPal for non receipt, then as you can't provide a tracking number to prove delivery, the buyer will be refunded in full. They can open the dispute 3 days after the estimated delivery date shown on the listing, maybe sooner if they open through PayPal.
It's best to try and resolve issues direct with the buyer whenever possible, as disputes are now recorded on your seller dashboard and will affect seller ratings - especially when you are in a no-win situation.
If all is resolved amicably, then once you have refunded you can send a mutual cancellation request to the buyer in order to get the final value fee credit. You need to do so within 45 days of listing end. Let them know in advance why you are doing so, assure them there will be no detriment to their account and ask them to agree to it:
http://res.ebay.co.uk/ws/eBayISAPI.dll?CreateDispute&DisputeReason=2&guest=1
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