Well, there's not much information available at present as there are a lot of disability groups up in arms about this. I would say it's possible but will depend on the nature of the disbility, possibly the age of the recipient (I now they are not considering transferring children under 16 to the new PIP), and I expect they will consider what medical evidence was provided for the award.
All up in the air but worth emphasising that those that have an indefinite award rather than a lifetime award may be reviewed at a point in the future.
I have always shown DLA as income but then offset this with corresponding expenses. In a recent case the DLA paid was for two children and the creditors accepted that this extra income could not be used to increase the DI payment an so did not even ask for a breakdown of the corresponding expenses.
In terms of the lump sum, I do agree with Gareth on this. The fact that the DLA was not being paid possibly meant that expenses were being funded by credit. As such, this back payment should reasonable be used to help repay creditors. However your particular IP may have a different view and be prepared to fight your corner on it.
Kazzafunk -- I am surprised your employer uses ATOS for work related sickness. Mine uses Capita, who have been brilliant. ATOS is going to be instincively biased toward the employer, whereas Capita (providing you are genuine) are really on the side of the employee. Far better than the old Welfare used to be.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014