Beat the butter and sugar for 2 to 3 minutes until pale and fluffy.
Beat in the eggs one at a time, then stir in the vanilla.
Whisk the flour, baking powder, baking soda, nutmeg and salt in a separate bowl.
Add the dry mixture in two parts on low speed, adding the milk with the second part. Mix just until the dough holds together.
Shape into a flat disc, wrap well, and chill for 30 minutes.
Heat the oven to 350°F (175°C) and line two baking sheets with parchment. Roll the dough to ¼ inch thick and cut 2½-inch rounds.
Place 2 inches apart, sprinkle with sugar if using, and bake 10 to 12 minutes until the edges are set and the bottoms are lightly golden.
Rest on the sheet for 5 minutes, then cool on a wire rack.