In order to use your hips to get your legs up, they need some opposition. This means all the muscles all the way up to the bar have to be active and involved in some way. Simple check is, if you feel your entire trunk equally involved, oblique muscles working just as hard as your center line, you have enough shoulder activation. If it feels like you're hoisting your hips with just the center line and/or you can't control spine position, your shoulders are too slack or over contracted. (Or possibly your hips/glutes are too tight to even be doing this exercise in the first place)
If you're "hanging out" deep with your shoulders scrunched up to your ears, the Serratus and various other stabilisers that attach to your scapula are all stretched out and in weak, non-stabilising positions. There's no opposition to allow you to involve your entire trunk and get all those oblique muscles working with the hips, and the stabilisers you would use to keep your back straight are not in a strong position.
If you try start from that position, you may end up rolling your shoulders forward and rotating internally in order to get enough activation to hoist the hips with the rectus abdominis, instead of anchoring your shoulders into an active position. The only upside to loading your shoulders in this position is the Physical Therapist you get might be cute.
A neutral position with the scapula flat against the back lets all of your various stabilisers be involved and do their job. Start with your shoulders working actively to maintain their natural (assuming you have good posture to start) position, not bottomed out. Since all of us who didn't grow up gymnasts are pretty weak there, it may be necessary to cue a bit of pulling back to counteract the natural tendency to go slack, particularly there at the top of the movement.
A common cue for activating there is "wrap your lats around into your armpits" (just don't confuse the muscle activation with actual rotation of the shoulder joint.)
Source: For a long time I had a serious problem with loading all the effort into the superficial centerline in this type of exercise and had proportionally very weak obliques. I put a lot of effort into learning to correct it :)