International buyer claiming not to have received item

[MESSING2]

2 weeks ago I sold a low value (£5) item to a buyer in Denmark, despite having stated in the auction that I only post to UK. As I was desperate to get rid of the item (and had already re-listed it several times) I went ahead with sending it.

I sent an updated invoice to the buyer with postage cost to their country (cheapest rate £8.50; quite a heavy/bulky item) and she said she was hoping it would have cost quite a bit less but paid it anyway.
I sent the item promptly, and got a standard PO receipt for it.

Fast forward 2 weeks and the buyer has opened a case saying she hasn't received it. I contacted her to say I would look into it, and asked if she could let me know if it does turn up in the meantime. PayPal have put the payment 'on hold'.

Can anyone advise what I should do next? Presumably I need to refund the buyer, and then try and recoup some of the funds either through the post office (or PayPal..?) and what happens to the payment that's 'on hold'?

Annoyed that if I refund her and don't get any compensation from anywhere else I will have affectively lost the item and the postage twice over. Bah.

TIA.

Claim from royal mail on an international claim for
Include the usual proof of postage, ebay order details etc.
Photograph or photocopy it all incase it goes missing lol

Yes, you need to refund now and make a claim from Royal Mail. I always send tracked when shipping abroad, and pass the cost on to the buyer. If they don't want to pay it, just cancel the transaction.

OK, will refund and then claim from RM. Bloody annoying.

Thanks for the replies.

An update: following advice on this thread, I refunded the buyer about a week ago, with the intention of filing a claim with the post office (not yet done so).
Today I got an email from the buyer saying they have just received the item, and asking what they should do.

I replied thanking her for letting me know, and saying I'd get advice and let her know.

So- can any of you wise folk advise? should I ask her to make a PayPal payment for the full amount, and if so, how? Does it have to go through eBay, somehow? or should I give her a reduction because of the delay?

TIA, again.

tell her to login to paypal and just send you the money again. Your email address will be showing on her original payment

thanks, butterflygirl. Should I offer a small discount due to it being so late, do you think?

No. It's not your fault the package sat in customs for a week.