Do you have a test case? I tried a couple of tests and could not reproduce the problem:

perl -MXML::Twig -l -MEncode -e'print Encode::is_utf8( XML::Twig->npar
+se( "<d>foo</d>")->root->text)'
perl -MXML::Twig -l -MEncode -e'print Encode::is_utf8( XML::Twig->npar
+se( qq{<?xml version="1.0" encoding="ISO-8859-1"?><d>foo</d>})->root-
+>text)'
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Both give me a result of 1