Preheat to 350 degrees F.
In a large mixing bowl, cream together butter and sugar. Add in flour, baking powder, salt and vanilla at a low speed. Dough will be crumbly. Add 1 tbsp of milk at a time to make the dough come together as a ball of cookie dough without being too sticky. If it gets to sticky, add a bit more flour.
Separate the dough into two even parts. Working with one dough part at a time, roll the dough out with a rolling pin or side of a cup to about 1/4-inch thickness. Use a 1 1/2-inch cookie cutter (or biscuit cutter) to make dough rounds. Place on a baking sheet (preferably with parchment paper but I didn't have any!) and use a knife or I used one of the Wilton decorating tips to cut a smaller center hole from the center of the dough rounds. Repeat with remaining dough.
Bake cookies for 10-12 minutes, until bottoms are lightly browned and cookies are set.
Cool for a few minutes on the baking sheet then transfer to a wire rack to cool completely.
While cookies are cooling, preheat oven to 300 degrees. Spread coconut evenly on a parchment-lined baking sheet (again, I didn't have any so it's fine if you don't use the parchment paper!) and toast 20 minutes, stirring every 5 minutes, until coconut is golden. Set aside and cool on baking sheet while you melt the caramel.
Place your unwrapped caramels in a large pot and add salt and milk. Cook over low heat stirring frequently until caramel has melted. Make sure you are watching this caramel or it will burn! When smooth, fold (same thing as stir!) in toasted coconut with a spatula. Using a knife, carefully spread topping on cooled cookies, using about 2-3 teaspoons per cookie. Don't worry if you cover the center hole. It doesn't change the taste of the cookies. Also, if the caramel mixture starts to harden or become difficult to work with while topping the cookies, just heat the remaining caramel mixture on the stove for a minute or two to re-melt.
While you wait for the coconut to set on the cookies, melt chocolate in a double boiler or in the microwave. Dip the base of each cookie into the chocolate and place on a clean piece of parchment paper or waxed paper. After each cookie is dipped, spoon remaining chocolate into a decorating bag (or in a sandwich bag with the corner snipped off - what I did!) and drizzle finished cookies with chocolate. Let chocolate set completely before storing in an airtight container. You can also freeze these cookies to enjoy later. Makes approx. 3 1/2 dozen cookies