If she complains to Royal Mail does she get the item and postage refunded? If so I would expect both back, if it wasn't a lot I'd probably leave it for ease if she's nice lol.
My husband and I sell a lot on eBay. If the customer returns the item then usually they do not get shipping costs back.
But you never received the item? Correct? If through no fault of your own you didn't get the item...it's just good business to refund the total amount to the buyer.
I know I certainly would.