To allow the student to resubmit in a Live Session the student will need to be 'restarted' from the assignment overview. Click the 3 dots next to a students name and select 'Restart Student'.

Note: When you restart a student, their reviews will be saved as 'drafts' and require to be submitted once again

This is what the student will see after they are restarted:

From here, they will have the option to remove their current submission and submit a new version of the file. They will have to remove the old file first.