Had an auction for some headhones finish yesterday with a winning bid of £40.00.
Today I've had an email from the buyer saying that it was his brother who put the bid on (told him it was for £20 and not £40) and he doesn't have the money to complete the sale and could I let him off?

Personally I think it sounds dodgy and am tempted to say no, but if you were in my shoes would you let him off?

You'll have to file an unpaid item case otherwise you'll end up paying the final value fee and the listing fee. You can't claim it back if you "let them off"

Second what Blazing said. File an unpaid item case and ebay will sort the fees out and then just relist it. It's not worth getting hung over matey and it could be genuine anyway. I understand that you would feel happy getting £40 for them as you may have expected less but you may get more next time anyway.

As they say, and put together the best ad you can to try & get more next time to cover the hassle factor.

if they paypal you fees above I would otherwise no caveat emptor- buyer beware- and all that. Dont be out of pocket for their error

Well I've given the second placed bidder a second chance offer and if doesn't want it I'll file an unpaid item case.