If the system returns an error when you try to make a refund with GoCardless, it is most likely because GoCardless needs to activate the feature for you.

Here is the official explanation they give:

As a rule of thumb, refunds are disabled to protect you as a merchant; but also for security reasons. The protection part is because a payment can be refunded, but the customer can request a chargeback (whether rightfully or not) and the bank will return the money, leaving you in a doubly negative balance. The security part is another layer, which ensures that if the account is taken over by force, the funds can't moved (or be refunded to another account of choice, if the perpetrator adds themself as a customer, say), thus ensuring the safety of funds in GoCardless (since they cannot be "refunded" to another account, nor the bank account changed without involving our Verification team).
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In essence, and very boiled down, the above is the reason why Refunds are disabled by default, and we enable them at the administrators request.
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With the above in mind, please can you fill out this form from a registered admin email address of the GoCardless account: → Refund request form