Beat the cream cheese and butter together for several minutes. Mix in the confectioners' sugar and vanilla, and beat until smooth and creamy. Cover and place in the fridge.
Pumpkin cupcakes:
Preheat the oven to 350°F (176°C). In a large bowl, beat the sugar, oil, pumpkin, and eggs until well blended. In a small bowl, combine the flour, baking soda, salt, baking powder, and cinnamon. Gradually beat the dry ingredients into the pumpkin mixture until well blended.
Line a cupcake pan with paper liners and fill each liner three-quarters full. Bake for 18 to 20 minutes, or until a toothpick inserted in the center comes out clean. Cool for 10 minutes before transferring to wire racks.
Cut a 1-inch by 1-inch (2.5 cm by 2.5 cm) square in the center using a small, sharp knife. Set the cake pieces aside.
Take the frosting and fill the hole with it, adding a little extra on top. Place a candy pumpkin on top of the frosting. Repeat this process for the remaining cupcakes.
Notes
Adjust the icing stiffness accordingly. Add additional 1 tablespoon of heavy cream if the icing consistency is too stiff or 1/2 cup of confectioners' sugar if the icing is too thin.