Preheat your oven to 350°F (175°C). Grease and flour two 8-inch round cake pans with gluten-free flour or line them with parchment paper.
In a medium bowl, whisk together the gluten-free flour blend, baking powder, baking soda, and salt. Set this dry mixture aside.
In a large bowl, beat the granulated sugar and softened butter together until light and fluffy.
Beat in the eggs one at a time, mixing well after each addition. Stir in the vanilla extract.
In a separate small bowl, whisk together the coconut milk, lemon juice, and lemon zest.
Gradually add the dry ingredients to the wet ingredients, alternating with the coconut milk mixture, beginning and ending with the dry ingredients. Mix until just combined. Do not overmix.
Fold in the 1/2 cup of shredded coconut gently.
Divide the batter evenly between the prepared cake pans.
Bake for 28 to 32 minutes, or until a toothpick inserted into the center comes out clean.
Let the cakes cool in the pans for 10 minutes before inverting them onto a wire rack to cool completely.
Prepare the frosting: Beat the cream cheese and butter together until smooth. Gradually add the powdered sugar until fully incorporated and creamy. Mix in the vanilla extract and 1 tablespoon of lemon juice.
Once the cakes are completely cool, frost the first layer, top with the second layer, and frost the top and sides of the cake. Garnish with extra shredded coconut.
Notes
Use room temperature ingredients for the cake batter to ensure a smooth emulsion.
If your gluten-free flour blend does not contain xanthan gum, add 1 teaspoon to the dry ingredients.
For a stronger coconut flavor, use full-fat canned coconut cream instead of coconut milk in the batter.