If the buyer has had the item for more than thirty days then he/she will have run out of time to open a case in the eBay Resolution Centre, although there is still the possibility that the buyer could end up contacing PayPal about the matter. PayPal give buyers one hundred and eighty days during which to open a case, so if you feel prepared to take the risk of the buyer turning to PayPal for help then you could tell the buyer that you're not prepared to refund. This would be easier to do if the item was a Collection In Person Only item and the buyer paid in cash, as if that was the case then given that PayPal were never involved in the transaction and the buyer has run out of time to open an eBay case you could get away with refusing to refund the buyer. If, however, the buyer paid via PayPal then you will have to decide whether you want to take the risk of the buyer contacting PayPal if you refused the refund, although if the buyer isn't too clued up about using PayPal in the event of a dispute, or just doesn't have the stomach for a battle of wits, then you may not hear anything further about the matter if you make it clear that you are not going to issue a refund.
At the end of the day it's completely up to you as to what you decide to do, but if the buyer collected the item in person and paid in cash then you don't have to refund anything, and the buyer cannot force you to do so.
