Police said they attended School Street in Upton at around 10.45pm on Tuesday after receiving reports of a man in possession of a firearm.
Officers discovered a vehicle with extensive damage parked on the road.
They launched an investigation but said they were satisfied that no firearm was used or discharged in the incident.
The car is believed to have been damaged with a hammer or similar item.
A 23-year-old man was arrested on suspicion of criminal damage. He has been released pending further enquiries.
Detective Inspector Dan Tillett said: “Wakefield CID are actively investigating this incident and at this time there is also no evidence to suggest a firearm has been discharged in connection with this offence and we have not had any other similar reports in the area.”
Anyone with information should contact Wakefield CID on 101, quoting crime reference 13170221764.