Preheat the oven to 170ºC. Cream the butter and sugar together until light and fluffy. Gradually add the eggs, mixing well between each addition. Sift in the flour and mix to combine. Add the milk and vanilla, and mix again until smooth.
Divide the mixture between the paper cases and bake on the middle shelf for 20–25 minutes, until a wooden skewer inserted into the cakes comes out clean. Leave on a wire rack until cold.
For the topping, beat the butter and vanilla until smooth. Gradually add the icing sugar and beat to combine. Smooth over the cupcakes with a palette knife. Use white chocolate buttons for the eyes, milk chocolate buttons for the wings (10 per cake), and cut the remainder in half to make ears. Use Smarties for the feet and beaks of the owls, and add detail with gel food colouring.