he then told me he was recording me and it was on camera
Perhaps the obvious thing to do is to obtain a copy of this recording and invite your lawyer contacts (or willing forum members) to review it.
I think the most common reason for an inspector not to scan a ticket would be because the passenger was unable to show it in a reasonable amount of time and so the decision to impose a penalty had already been taken, after which point scanning the ticket would serve no immediate purpose. I take the view, in common with some others on this forum, that the regulations allow a Penalty Fare to be issued if the passenger isn't in possession of a valid ticket at the point in time when they are asked to present it, for example when the inspector says "Tickets, please!" to the carriage. If for any reason you didn't complete the purchase until after the inspection was announced, then unfortunately for you they are allowed to impose a Penalty Fare.
1) Please show us the time ticket was issued (or send an image of the 2-D code in a private message to one of us for us to check).
2) Please tell us how you entered Reading station. (The train company already has your image from the inspector's recording, so will be able to look on the station CCTV to find this out.)
Separately, the Penalty Fares signage is poor at Reading station, so an appeal on that basis might have some chance of success.