"Is there something I can help you with?" is the magic rhetorical question which helps to ward of cops, city officials, and sometimes a hostile neighbor.
When a government official approaches you at your squat and you repeat these magic words it sets the tone of the dynamic. Instantly you go from a suspicious character to the one who is in charge. The official then switches from their planned accusations and interrogation to something else.
The reason this magic phrase does this is because it exudes confidence in the fact that you are in charge here, and that you are the one with the power to render assistance. Instantly the power dynamic has changed.
Often an official will simply respond, "No sir/mam." and leave.
Other times they will spontaneously render useful information, "Well, we had a complaint from a neighbor that there were people squatting this building."
You can then revert to the jedi mind trick, "These aren't the squatters your looking for." I'm serious, you can then say something like, "I haven't seen anyone on the property, and I've been here all day." or something like that.
Of course the magic words don't always provide instant victory. If the official stays around and tries to figure out what you are doing or who you are the magic words have merely given you an advantage in the situation which is still invaluable.
What to do next?
Usually the first test a squatter must pass when establishing a squat is to deal with the cops. If the cops never come by then count yourself lucky, but everyone should be prepared for that moment even if it never arrives. There are a number of strategies for dealing with the cops that I've seen, and these are the pros and cons as I see them:
