Preheat oven to 350°F (175°C). Line a 12-cup muffin tin with paper liners.

In a large bowl, cream together the butter and sugar until light and fluffy. Beat in the eggs one at a time, then stir in the vanilla.

In a separate bowl, whisk together the flour and baking powder. Gradually add the dry ingredients to the wet ingredients, alternating with the milk, beginning and ending with the dry ingredients. Beat until just combined.

Fill each muffin liner about 2/3 full.

Bake for 20-25 minutes, or until a toothpick inserted into the center comes out clean. Let cool in the tin for a few minutes before transferring to a wire rack to cool completely.

In a medium bowl, beat the cream cheese until smooth. Gradually beat in the powdered sugar and vanilla extract until smooth and creamy.

Once the cupcakes are cool, use a small knife or cupcake corer to remove a small portion from the center of each cupcake. Fill each cupcake with the vanilla filling.

In a large bowl, beat the butter until smooth. Gradually beat in the powdered sugar until smooth.

Add the caramel sauce and milk and beat until light and fluffy.

Frost the cupcakes with the caramel frosting.