Preheat oven to 160°C (325°F). Place the flour, sugar, butter, eggs, milk, and vanilla in the bowl of an electric mixer and beat on medium speed for 6 minutes or until pale and smooth.
Spoon the mixture into twelve 1/2-cup-capacity (125ml) cupcake tins lined with paper cases. Bake for 22 to 25 minutes or until cooked when tested with a skewer. Place on a wire rack to cool completely.
While the cupcakes are cooking, make the chocolate ganache icing. Place the sour cream and chocolate in a large bowl and mix until smooth. Set aside at room temperature for 30 minutes or until cool and thickened. Using a palette knife, spread the icing over the cupcakes and sprinkle with coconut before serving.