disallow references to function locals from return type annotations

src/compiler/checker.ts

@@ -492,12 +492,16 @@ namespace ts {
                                     : false;
                             }
                             if (meaning & SymbolFlags.Value && result.flags & SymbolFlags.FunctionScopedVariable) {
-                                // function scoped variables are visible only inside function body and parameter list
-                                // technically here we might mix parameters and variables declared in function,
-                                // however this case is detected separately when checking initializers of parameters
+                                // parameters are visible only inside function body, parameter list and return type
+                                // technically for parameter list case here we might mix parameters and variables declared in function,
+                                // however it is detected separately when checking initializers of parameters
                                 // to make sure that they reference no variables declared after them.
-                                useResult = lastLocation === (<FunctionLikeDeclaration>location).type ||
-                                    lastLocation.kind === SyntaxKind.Parameter;
+                                useResult =
+                                    lastLocation.kind === SyntaxKind.Parameter ||
+                                    (
+                                        lastLocation === (<FunctionLikeDeclaration>location).type &&
+                                        result.valueDeclaration.kind === SyntaxKind.Parameter
+                                    );
                             }
                         }
 

tests/baselines/reference/functionVariableInReturnTypeAnnotation.errors.txt

@@ -0,0 +1,10 @@
+tests/cases/compiler/functionVariableInReturnTypeAnnotation.ts(1,24): error TS2304: Cannot find name 'b'.
+
+
+==== tests/cases/compiler/functionVariableInReturnTypeAnnotation.ts (1 errors) ====
+    function bar(): typeof b {
+                           ~
+!!! error TS2304: Cannot find name 'b'.
+        var b = 1;
+        return undefined;
+    }

tests/baselines/reference/functionVariableInReturnTypeAnnotation.js

@@ -0,0 +1,11 @@
+//// [functionVariableInReturnTypeAnnotation.ts]
+function bar(): typeof b {
+    var b = 1;
+    return undefined;
+}
+
+//// [functionVariableInReturnTypeAnnotation.js]
+function bar() {
+    var b = 1;
+    return undefined;
+}

tests/cases/compiler/functionVariableInReturnTypeAnnotation.ts

@@ -0,0 +1,4 @@
+function bar(): typeof b {
+    var b = 1;
+    return undefined;
+}