Everytime I shoot a wanted npc, im flagged as wanted in return. Makes bounty hunting pretty hard as the "expenses" are pilling up quite rapidly
So this part hasn't been fixed with 1.05? I guess I'll continue to avoid interdiction instead of use them for some additional kills.
Do you scan them before firing?
If an NPC is marked as Wanted (without scanning them with a Kill Warrant Scanner) then there should be no problem shooting them and claiming the bounty. The local police won't have a problem with that. However, whichever faction the Wanted NPC belongs to WILL have a problem, and you'll see their ships turn red on the scanner. If you shoot too many ships (Wanted or not) from the same faction then they will actually turn hostile and shoot you if you come near.
If an NPC is Clean but you use your Kill Warrant Scanner to find out they are Wanted in another system, then shooting/killing them will mark you as wanted in the current system and the authorities will turn on you. In this case I assume you're meant to follow them via their Hyperspace wake and have at them without any other NPCs around.