In the bowl of a stand mixer, cream the softened butter and sugar together for about 2-3 minutes. It should be smooth and well combined.

Add the vanilla and milk. Mix until combined.

Add in the flour, baking powder, and salt. Mix until fully incorporated, scraping down the sides as needed.

Transfer the dough to a lightly floured work surface. Using a rolling pin, roll the dough into a rectangle about ¼ inch thick.

Using a round cookie cutter, cut out 2 ½ inch circles and place them onto a baking sheet. Then use a 1-inch cookie cutter to cut a smaller circle in the center of each of the larger round circles.

Transfer the cookies to the freezer for about 10 minutes.

Bake in the preheated oven for approximately 10 minutes, or until set. Do not overbake. Allow cookies to cool completely before assembly.

Meanwhile, while the coconut is toasting, place the caramels and evaporated milk in a large pot. Heat over low heat and stir frequently for approximately 10 minutes. Caramel should be melted and smooth.

Using a spatula or knife, spread a layer of caramel over the top of each cooled cookie.

Add the toasted coconut to the remaining caramel. Stir until well combined.

Allow to cool slightly. Using gloved hands, place about a tablespoon worth of the coconut caramel on top of each cookie, shaping it to the cookie. As the caramel cools, it will harden. Work quickly to finish the remaining cookies.