Grease and flour an 8-inch square cake pan and set aside.
Preheat oven to 325 degrees.
In a mixing bowl, mix sugar, vegetable oil, and eggs and 2 1/2 tsp vanilla.
In a separate large mixing bowl, sift together flour, baking powder, salt, cinnamon, nutmeg, allspice, and baking soda.
Fold in dry ingredients into wet mixture. Blend on low speed with an electric mixer for one minute. If batter seems too dry, add the 6 reserved tablespoons of milk one at a time until you reach desired consistency.
Fold in carrots and nuts and raisins (optional), until well blended. Pour into prepared pan
Bake for 40-45 minutes or until a toothpick inserted in center comes out clean . Cool cake in pan, for 20 minutes.
Remove cake to cake rack and cool completely.
Frosting: Beat cream cheese, milk,butter and additional vanilla with an electric mixer until well combined.
Gradually add powdered sugar, beating until smooth. If frosting is too stiff, add a few additional drops of milk.
Frost top and sides of cake. Sprinkle chopped walnuts on top of wet icing and allow to set.
NOTE: If making a layered cake. double frosting ingredients and frost between each layer.